Lipoprotein lipase (LPL) and its cofactor,apolipoprotein (apo) C-II, play a major role in normal triglyceride metabolism. Both proteins contain multiple functional domains required for activity, including sites essential for catalytic or activation functions, lipid binding and interaction of the enzyme with its cofactor. We have utilized the techniques of site-directed mutagenesis and chimera analysis to gain new insights into these important functional domains of LPL and apoC-II. LPL contains a 22 residue loop defined by cys-216 and cys-239 which may modulate access of the substrate to the catalytic site. We have previously generated 9 different mutants in which the LPL lid and its two amphipathic helices were disrupted and demonstrated that the LPL loop is essential for lipid interaction. We have now analyzed the ability of these 9 mutants to hydrolyze different triglyceride (TG) and phospholipid (PL) substrates. Changes in the LPL or hepatic lipase (HL) lid alters the ability of the mutant lipase to hydrolyze different lipids. These studies indicate that the lipase lid is a major determinant of lipase substrate specificity providing new insights into the role of the LPL lid in lipid-substrate interaction. Previous studies have suggested that the terminal tetrapeptide (TT) in the C-terminal domain of apoC-II may mediate the ionic interaction between LPL and apoC-II and thus, be essential for LPL activation. We have generated 4 different apoC-II mutants in which the ionic properties and/or secondary structure of the C-terminal tetrapeptide were altered. Characterization of the functional properties of these mutants indicate that changes in structure but not elimination of charged residues reduces apoC-II activity. These studies rule out ionic interaction as a mechanism by which the TT potentiates apoC-II activation of LPL and provide new insights into apoC-II structure-function.